Turning The Screws

S&P 500 duly paused yesterday but the (beyond very short-term) outlook remains as bearish as before. Bonds agree, but in the interests of real assets, I would have preferred to see a stronger performance by miners and oil stocks. This suggests the next downleg in the stock market would affect precious metals and commodities as well. Some relative resilience (especially in gold) is there but won‘t be enough to change the neutral to bearish outlook in the least. As always in this tightening period (Treasuries keep the pressure and USD is rising), copper (with silver) is to suffer the most. Cryptos – that‘s the same story. It‘s only in oil where I expect the bulls to put up a good fight – the spike didn‘t happen yet, and once oil stocks decouple again from the general stock market, it would be easier. For today, I look for a strong day in the red across the board – good for open profits in stocks and cryptos.

Let‘s move right into the charts (all courtesy of Stockcharts.com).
 

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

The caption says it all – S&P 500 is primed to decline some more, and unlike yesterday when I was looking for a little counter trend move first, today‘s expectations are of a day in red with insufficient buying into the close, creating a lower knot.
 

Credit Markets

HYG, LQD and TLT

Bonds are very risk-off, and the disconnect between quality debt instruments and junk bonds can be counted on to persist, even increase until stocks bottom.
 

Gold and Silver

gold, silver and miners

Precious metals haven‘t formed the bottom yet – miners keep acting weak, which is concerning. The prospects of two 75bp rate hikes are biting but if there‘s anything worth holding alongside paper and crypto shorts, it‘s namely gold and crude oil.
 

Crude Oil

crude oil

Setback for a couple of days, that‘s the most likely conclusion. Another upleg is on the way unless we break convincingly below $108.50 – the most optimistic scenario is that the bulls keep defending it.

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